The acquisition of Merck KGaA by P&G is interesting on lots of levels and it reflects some of the seismic challenges/opportunities the consumer healthcare industry faces at this point of change.

Why is P&G committed to healthcare/wellness? It probably reflects what we already know; the industry is doing ‘ok’, but the future potential is HUGE – we are still just struggling to define a journey to get there! P&G CEO David Taylor recently defined this growth potential based on… ‘The 3 megatrends that have supported the growth of OTC healthcare for the past decade should continue for many years to come.’ The 3:

Ageing population – over 65s population doubling to 1.6B by 2050

Wellness/Quality of life – aging populations focus on quality/outcomes and will invest in achieving it

Need for control – consumers are – slowly – getting that they need to drive this. No-one will do it all for them & they need info/support and relevant solutions to do this. Sadly, most regulators and many HCPs don’t get this ‘truth’ yet…

Scale aint what it used to be! This is also a tacit acknowledgement that the hegemony of global scale is over – in truth, it never really got going in OTCs. P&G know a thing or three and this deal wouldn’t have fitted their $ billion plus asset model of recent times. It is about smaller, specialist brand assets targeting interesting future-potential high margin wellness needs – this is a strategic change. Whether Nelson Peltz’s agitation is behind it or not is, in the end, moot, but in consumer healthcare this is interesting and it drives 3 mega-challenges:

New marketing models. To capture more growth the big OTC/healthcare players need to consider their investment models and global vs local balance – superior audience data/understanding will be key & influencing/expert strategies will need to change. We’ve wasted too many years ‘imagining’ that consumer healthcare is just like FMCG – it isn’t – this has driven some poor strategic choices.

Fighting commoditisation through ‘service’ and trust. Brands might or might not be facing an existential crisis [Link to Bain & Co article ] but in healthcare where generic solutions and regulatory constraints abound we need to define how we add value vs ‘the ingredient’ and the endless – partly ridiculous – rhetoric that savvy people buy own label. Amazon et al are magnifying this. But, we still believe, that better marketing – strong data/insight, more relevant products, information & service integration into e-commerce models etc. – can still create a world where consumers/shoppers TRUST brands with their health. The nature of this trust relationship is a fundamental truth that can differentiate us from FMCG. Healthcare must resist becoming transactional – an unintended consequence of mass market/mass retail/FMCG mindset.

Regulatory change. Underpinning this is a pressing need to drive regulatory/access changes to facilitate more marketing – this mustn’t be an ‘unfettered’ free market wild west – but if the industry is tasked with driving behavioural change then marketing, not healthcare systems/governments, will make it happen.

This makes us feel really positive. These are the challenges we & Creative Leap want to work on.

This is BIG STRATEGY and not enough of the industry is reflecting on, or talking about this stuff.

It’s complex and multi-faceted. A blend of big data and big insight. A need to be highly commercial – but with creativity and marketing at its heart. As sad consumer healthcare geeks we’re always happy to talk about the above subject matter with likeminded souls! So, get in touch.